Well, good morning, everyone, and welcome. We appreciate you joining us for this WTR Insights Conference session with Sol Strategies. I'm John Roy, Managing Director of Technology here at Water Tower, and it's great to be with you. Today, we'll be joined by Michael Hubbard, he's the CEO, and Steve Ehrlich, he's the Chief Strategy Officer. Thank you for spending time with me today, gentlemen. Oh, thanks for having us, John. It's great to be back. Great. No problem. As a quick reminder before we start, Sol Strategies' safe harbor statements can be found on their website. Additionally, this discussion may not be reproduced or transcribed without written consent of Water Tower Research. We welcome your questions through today's conversation. Please submit them through the chat, and we'll do our best to address them in a follow-up email on our follow-up management series report that's coming. If you'd like to request a meeting with Sol Strategies, you can do so at the conference portal, and we will attempt to get that all done. With that, let's begin. Michael, why don't you give us a quick intro to the company? Absolutely. Thanks, John. Sol Strategies is a Canadian public company. We trade primarily on the CSE as well as on the Nasdaq, and we were actually the first public company to focus fully on the Solana ecosystem. Now, the company actually has a long-standing history in the crypto space, going back to 2018, when we were known as Cypherpunk Holdings, so we've always had a focus on blockchain privacy and Bitcoin back in the day. 2024, we pivoted into Solana as we saw the importance of high-performance, low-cost blockchains that were emerging. Solana really struck us as the optimal architecture for the blockchain of tomorrow. Critically for us, we see blockchains as not just something to speculate on in the short term, or somewhere to launch an NFT or a meme. We're looking at blockchain technology and distributed ledger technology as something that can fundamentally change global finance, where we're breaking down borders, we're reducing settlement times, taking away friction, enhancing access, and that's really where our focus has been for the last 18 months or so. Over this time, we've successfully grown our business and established ourselves as an important infrastructure provider on Solana. What we do is we actually operate validators on the Solana network, which means we are processing transactions and securing the network. In fact, we process about 1% of all transactions on the Solana network today. It's between 1 million and 2 million transactions every single day that are processed directly by us. Importantly, we actually capture revenue on all of these. That's one of our core revenue streams through our validator business. Part of that is that we have our own treasury, but we have substantial third-party stake as well, where third parties are delegating to our validators, and that actually makes up for about 80% of the stake on our validators. Today, we have over 34,000 unique wallets that are delegating to our validator network, and we also have a liquid staking token that we launched back in January called STKESOL. STKE is our Nasdaq ticker. STKESOL is our liquid staking token, and that has over 1,200 unique holders on that just in the last three months since we launched it. Really what the importance of that is the exposure to the Solana economy. When we look at a blockchain, what most people see is the token. You got the ETH token, you got the SOL token, you got BTC, but that's like the U.S. dollar. The U.S. dollar does not singularly represent the U.S. economy. A smart contract blockchain like Solana has an entire economy that is operating on it, where people are building startups, building apps, building products. They have their own users. They have their own tokens, their own economic activity. What we're really focused on is how do we capture that economic activity beyond speculating just on the base token. That's really where our focus is lying and where we're going from here. Yeah. Speaking of capturing additional revenue, maybe you could give us a quick overview of the fiscal first quarter? What were the key takeaways and maybe anything that you've announced since the actual end of the quarter as well? Yeah, absolutely. Well, Fiscal first one is October to December 2025. We're going to be announcing Q2 probably in about a month from now. Yeah, Q1 was really good for us. We saw 120% year-on-year growth, in SOL terms, on the validator revenue side. Overall, just significant growth on the whole validator business. As I mentioned, I believe Q1 was about 3.4 million SOL in stake, over 30,000 unique wallets staking with us. Very importantly, we announced the partnership with VanEck. VanEck launched their Solana spot ETF, VSOL. Fiscal Q1, which is Q4 of calendar 2025, saw an onslaught of Solana ETFs being launched in the market. Great momentum coming in there, seeing more of these traditional vehicles giving investors exposure. We're very proud to be working with VanEck and being the SOL staking provider to their ETF. It's a great endorsement of our infrastructure, our base, our compliance base, being ISO and SOC certified, having all the redundant systems and engineering teams that we have, allowing us to provide that competitive return on our staking yield. Yeah, that was really great for that quarter. Just after the quarter, as I mentioned, we launched our liquid staking token, STKESOL. I'm so very excited about that, and that's a really important growth for our network. Because when you're talking about validators, you're competing with the entire validator network on yield, trying to capture that retail flow, and limited institutional flow, which we're seeing is growing, but it's still limited at this time. With the LST, what we're seeing is that we're actually delegating to dozens of validators. We're supporting over 60 different validators on the Solana network. It moves us up a layer into kind of an aggregator role where we're now saying, "Look, we're going to develop the delegation strategy," and we use an algorithm that uses over 130,000 different metrics for every validator to assess their suitability, and then we actually become more of an orchestrator and sitting in that intermediary position. Excellent. Yeah, it does seem like an excellent idea that's going to be a real winner. Certainly, the regulatory environment's important. Steve, maybe you could give us what's going on with the CLARITY Act. I know a couple things have happened recently, even without Congress getting involved. We're really obviously focusing on the U.S. at this point. Yep. Yeah, look, thanks for having us, John. I appreciate being here and talking about our special company. The CLARITY Act has been in Congress for a while now, and I think it makes progress, it slows down, it makes progress. I think the number one takeaway of that is the word progress. At the end of the day, there will be some version of the CLARITY Act that gets through, which is a huge step in the regulatory environment in the United States, right? If you look back over the last five years, we've worked, and businesses have worked in a very unclear, unstable environment in the U.S. Now I think we have an environment where we're trying to bring regulatory clarity, therefore the CLARITY Act, into the world. As on that, even today, I think, there's some information that came out in the SEC about some focus on what they're doing, related to DeFi and aggregators and front ends. We're seeing, even without the CLARITY Act, some rules, potential rules or some judgments coming out, opinions coming out from the SEC that give us a lot more clarity to work in the environment. That's all a major step in the adoption of the blockchain, especially in the financial markets. Great. Hey, certainly, crypto goes up, crypto goes down, the sentiment changes, et cetera. With Solana being so key to so many different things, how are you guys navigating the environment? I know people are talking about digital commodity. Can you give us some kind of background on that? Certainly, obviously, your revenue grew a lot, but is there something underlying that we need to be cognizant of? Yeah, absolutely. Importantly, we are seeing a lot of rulemaking, not just at the kind of congressional level, or where things are maybe a bit slower, but the SEC, the CFTC, they're all providing guidance on an ongoing basis. Recently, guidance stating that SOL is, in fact, a commodity, together with some of the other major layer one coins, which is very helpful. Yeah, we're undoubtedly in somewhere between a bear and a crab market right now. It feels more like a bear, but price action is more crabby, at least in the last few weeks. I guess macro environment, there's still a lot of uncertainty. Things are kind of like a powder keg. We don't really know which way they're going to go. For us, what that means is that our focus really is on growing the base of the business to be ready to capture that upswing when it comes. Going back, we've all been through a couple bear markets in the crypto industry. I was around in Solana when FTX happened back in the day, and Solana dropped to $8, and everyone thought it was over. What happens is really remarkable, because in those times, there's almost a certain kind of clarity. Sorry, we're using the word clarity a lot, but there's a certain clarity and calm that comes over the serious builders, right? Because there's much less going on, and there's much more time to focus and step back and think about, from a first principles basis, what are we actually needing in this industry? What are we building? Where do we focus? That's how we're looking at this time right now. Now is the time to take a step back and build up that base, that foundation. That's where recent announcement of our Dark Lake acquisition comes in as well, really, really great team joining us, incredible work that they've done in zero-knowledge technology. Vitor is an incredible engineer, Thiago, an incredible researcher and expert in cryptography. What we're working on with them and going to be building in the future is really, really important in building up that foundation. Long term, we think that there's going to be a really valuable and significant upswing in economic activity on blockchains and particularly Solana, as a matter of time when that happens. Right. Yeah, just a matter of time. Talking about Dark Lake, in terms of the strategies of the things you need to do, then there's acquisitions, technology, there's building of your own. Obviously, security is critical. Maybe you could give us some insight into the elements. You look again in terms of focusing on what's next. Yeah, this is a great question. I think when you look at the history of the markets, and when I got started in the markets 30 years ago, and we had phone-based business. Now we're fully on the internet, we're on mobile devices, and the next phase of all the financial markets is happening on the blockchain. Which blockchain is it happening on? Solana. It's not just the trading markets, it's actually the money movement markets too, and how money moves and how stablecoins move are all happening on Solana. Not only you have the cash, you have the trading markets, there's even more products being traded on the trading markets. Equities, options, futures, perpetuals, prediction markets, RWAs, all happening now on Solana. The first piece of our strategy, in addition to our validators, which we had acquired over the last year, was picking up the Dark Lake technology and the privacy because privacy is extremely important, especially in the institutional world, where you don't want people seeing your trades. You don't want anyone stepping in front of them. Having that privacy layer is extremely important. Next phase is trying to find acquisitions or organic growth on building products that take advantage of the infrastructure we've built. You'll see us be aggressive there. We think it's an important aspect of what we're doing in the future. Organic growth and acquisitions are two great ways for us to continue to grow the business and be a really important part of the Solana infrastructure. Great. Certainly one of the things you've done recently, as Michael mentioned earlier on the call today, is the liquid staking token and STKESOL, or however you want to pronounce it. What is your STKESOL? I guess there's two things that I really am curious about, and I'm sure investors are. One, what does it really do? You say it's a higher-level thing, but okay. Two, what does it really mean for your business? Yeah, no, great questions. It can be a bit daunting, and it can be hard for us to explain as well, especially sometimes I get bogged down in the engineering talk. Yeah, STKESOL is a liquid staking token. What does that mean? Solana is a proof of stake network. So is Ethereum. It didn't start out that way, but now it has become one. Essentially, what this is it's a way of securing the blockchain that is more efficient than the Bitcoin method, which is proof of work, which consumes power and data centers. Now, you can stake your tokens on Solana, which means locking them up with a particular validator, and gives that validator power to secure the network to process transactions. If you want to get your SOL back, you have to wait two days to do so. While it's staked, you can't do anything with it. A liquid staking token is essentially a token that says, look, we can take a smart contract, a program, like an app on your PC, and that program will stake the SOL, and it'll give you a receipt, a token, a liquid staking token that is your claim for your underlying SOL that you can then have as a token in your wallet that you can trade freely. When you use STKESOL, what you're doing is that under the hood, the SOL is staked, meaning you're earning the staking rewards 6%-7% per annum. You have a liquid token. You can go and you can sell it immediately without waiting two days. You can use it as collateral, so you can borrow against it. You can provide liquidity for trading markets that involve that token. There's really additional ways to earn yield, but also maintain your liquidity, use it as collateral, et cetera. At the same time, instead of you having to pick a single validator and trust that your choice is a good choice, that that validator's reliable, that they're going to have good uptime, that they've got an engineering team, you're actually delegating the choice to the liquid staking token manager, which is us in this case, which means that we've got an algorithm. We use 130,000 data points per validator to evaluate them. We use a 30-day period to evaluate them. We choose which validators to delegate to, and we delegate to dozens. If any single one shuts down, your principal's never at risk, but the impact on your rewards is much lower as well. That's really the benefit. Excellent. How much, how big could it get? Sky's the limit. I'm not asking for a projection, but just it could get big, it sounds like. Oh, yeah, for sure. Look, if you look at the total staking market right now on Solana, over 60% of all SOL in existence is staked. That's about 400 million Solana tokens that are staked on the network right now. No, sorry. Let me correct myself. I believe about 17% is the last number I saw. This was a month or two ago, so this might not be accurate. It might be higher now because the trend has been up. About 17% of all the staked tokens are liquid staked, meaning through liquid staking tokens. That's tens of millions of SOL. The largest liquid staking token is well over 10 million, might be over 15 million SOL at this point. The sky really is the limit there, and it's just about providing a competitive product. Having a good delegation strategy, having good yield, and having good integrations in DeFi. Yeah. It's just a good idea, just to put it simply. Yeah, absolutely. In terms of institutional adoption, certainly institutions getting behind this, TradFi and DeFi getting kind of a little more better aligned. I don't want to say closer, but let's just say better aligned. What kind of trends are you seeing? I know a lot of managers are doing things. There's a lot of unique wallets out there that are active. What do the institutions think of all this? I think we're seeing definitely a cooling with the macro environment. We saw a massive momentum shift last year where, particularly in kind of the fund manager market, we saw a big, active move towards working in the blockchain industries. I think right now what we're seeing is everyone is still very interested, but they're realizing that they can take a little more time to assess where they want to be. Last year, anytime there's a run-up, there's kind of a FOMO moment where people want to get in sooner rather than later. Right now, there's time to build. Institutional interest has not dissipated. It's definitely still there. Interest remains on what are compliant, what are safe ways to engage in blockchain industries. We're seeing RWAs are still very large, Securitize with their products. Superstate has done some great launches in the last nine months. The general tokenized stock market has grown significantly, and we think that's going to continue, and there's different models in it, and it's going to be interesting to see which model is going to persist there. We're also seeing growth in credit, private credit. Securitize has done some work there. I mentioned them. I think right now what's happening is that all the institutions are interested. Swiss banks recently, last week, I believe, announced a big initiative to work on stablecoins, which is a great move forward for a very conservative economy. We're seeing all the major banks in the U.S. actively working on it at the moment. Western Union and PayPal are massive players that are working actively on Solana. PayPal USD is becoming a very dominant stablecoin on Solana. Institutional interest remains there, and I think at the moment it's really about building all the foundations and the frameworks to allow that participation in a manner that is safe for consumers and the underlying investors that meets all the regulatory thresholds and the compliance requirements. Yeah, certainly when you get regulatory clarity, institutions get a lot more interested in as that progresses, as Steve was mentioning before. Gentlemen, we've kind of run up against our time limit. I want to thank you both for spending some time with me today, and hopefully we'll be able to do this again soon. Thanks, John. It's been great. Thank you, John. Appreciate it. Investors, you can find current and future interest and insights into Sol Strategies at Water Tower Research website, which is www.watertowerresearch.com. 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